Nigeria Economy | |
Nigeria Economy | |
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Tuesday, April 14, 2020 / 07.40AM /
Bukola Akinyele for WebTV / Header Image Credit: WebTV
Africans should
collaborate on how to raise Liquidity in order to build infrastructure.
Said the CEO of Economic Associates on a WebTV morning segment
CoronanonomicsWatch.
Speaking on the
global development and realities on how it will impact Nigeria, the economic
analyst said that there were two sides to the story, there is
pandemic itself and there is a fallout from the pandemic.
The pandemic
arrived in Nigeria 3 weeks ago but some of the social, economic and
political consequences of the pandemic arrived in Nigeria ahead of the health
challenges. Such early challenges included the decline of the domestic
capital market, in addition to the fear and anxiety emerging from the health
pandemic itself.
The economist
noted that Nigeria didn't shut down rapidly enough after the pandemic
announcement on the Asian continent. China was locked down for three
months. Teriba explained that the only way to prevent the disease from
spreading was through nation-wide self-isolation.
Speaking on
policy responses and monetary policy. He said, the pandemic was characterised
by a widen divergence between the economical financial task.
The world economy
has been slowing, trade has been declining largely because of a supply glut.
He equally
pointed out that a liquidity glut would impact the global economic system
by liquidity-challenged nations looking for more capital inflows in a post
lockdown environment.
On the
economy's growth for Q1 and Q2 as it concerns sub Saharan, Africa
and Nigeria and how it will impact businesses and the households, the economist
explained that for Q1, Nigeria ahead of the pandemic had a slow
growth outlook as a result of declining oil prices, combined with supply chain
disruptions and declining demand this would lead to a slow Q1 GDP growth rate
in 2020.
Speaking further
on what would happen in Q2 2020 the outcome, according to Teriba was largely
uncertain if conditions permit the lockdown in Nigeria to end in the month of
April. Production would take some time to ramp up and input deliveries would
require at least a month, thereby locking in only one month of stable
production activity in Q2.
He was, however,
optimistic that if things pick up in the second half of the year there
may be a resultant growth that may be better than last year's 2.27%.
On the president
of International Monetary Fund [IMF] talking about recession and what might
likely happens to Nigeria's economy Dr.Teriba said , there was a need for
Nigeria's economic management to align with global realities. He noted that it
was difficult to raise any revenue in the lockdown and it was going to be
difficult to do so immediately after the lock down.
Nigeria needs an
opportunity to get in massive capital inflows like other African counterparts.
He spoke further
on tight monetary policy and high domestic interest rates despite the impact of
the COVID-19 impact on the economy. He observed that Nigeria had limited
monetary policy leeway as a result of low external reserves and low
international oil price, he therefore, felt that more of the policy orientation
should tilt towards fiscal policy. Teriba advised that the main problem
to solve now is to raise external liquidity to where we can regain monetary
policy control.
He said,
Nigeria's external liquidity was very low and that the economic managers needed
to find ways to bolster liquidity in the face of persistent global conditions.
Teriba said that when asset values were high Nigeria failed to attract
capital assets in good time. Asset values are low even in terms of oil sector
investments.
The economist was
of the opinion that Nigeria should begin to talk about its nascent assets and
how they could be turned into liquid cash flows. He noted that Nigeria had one
of the biggest continental hydro assets. The military camps and rail
stations abandoned in Nigeria can attract foreign investors. He said Nigeria is
asset-rich.
The expert cited
Indian as a country in 2018 that got $64billion in foreign direct investment in
one year in form of equity and not debt. In his opinion Nigeria should
use equity due to the large asset base the country has to offer to strategic
investors.
He cited the
African Continental Free Trade Agreement (AfCFTA) , noting that trade is
a secondary issue, suggesting that for a nation to trade, it must produce and
to produce it needs infrastructure. Africa's infrastructure deficiency means
that it cannot produce thereby resulting in net trade losses.
For nations to
add value to what they produce they need infrastructure, for nations to deploy
infrastructure they need liquidity. African countries, therefore, need to
cooperate in how to raise liquidity to deploy infrastructure which will make
trade happen, said Teriba.
The CEO of
Economic Associates insisted that the country and continent needed to dimension
its economic marginalisation. If economies are contracting they cannot talk
about trade because of their infrastructural deficit.
Teriba says that
Nigeria should be worried about its liquidity for infrastructure and once
this is sorted out, trade and growth will happen naturally.
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